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Name
Non–deliverable RMB Forward Deal
Introduction
Non–deliverable RMB forward deal (NDF) indicates that customer signs RMB to USD non-deliverable forward deal contract with Bank of China Rotterdam Branch to determine the forward exchange rate, notional principal, maturity date and other clauses. Upon maturity, customers only need to make settlement in USD after offsetting the balance between the contract rate and market spot rate without delivering the notional principle. The term is generally less than one year.
Features
This product can serve as a hedging tool, by which customers can lock up the future RMB to USD exchange rate, or use NDF to hedge the expected appreciation or depreciation of RMB, therefore to save exchange cost.
Target Customers
The product is applicable to enterprises in China in need of avoiding USD to RMB exchange rate risk.
Procedure
1. Opening account: customers applying for NDF deals shall open an account at Bank of China.
2. Signing agreement: customers shall sign the Master Agreement on NDF Business with Bank of China in two originals, each party holds one original.
3. Application: customers need to fill in Power of Attorney for Transactions for NDF transactions.
4. Conclusion: after checking the validity of customer's application by Bank of China, customer needs to pay certain proportion of margin or let Bank of China deduct certain amount of credit line. After transaction, Bank of China will send a confirmation letter to customers.
5. Delivery: on delivery date, Bank of China and customers will handle the USD delivery (profit or loss after offsetting the balance between the contract exchange rate and current market exchange rate) according to the agreement.
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